The provisions of force majeure clauses in supply agreements governed by South African law, which were so carefully scrutinised during the COVID-19 pandemic, may provide some relief, but that will depend on the wording of the clause. Force majeure (directly translated from Latin as “superior force”) having been generally defined as

“An act of God that is unforeseen and unforeseeable and out of the reasonable control of one or both of the parties to a contract, and which makes it objectively impossible for one or both of the parties to perform their obligations under the contract”,

the imposition (by a government) of a levy on the import of goods is not force majeure.

The alternative to consider is whether the imposition of the levy gives rise to a supervening impossibility of performance, but supervening impossibility of performance only arises where the performance of an obligation becomes objectively and permanently impossible through no fault of either of the parties. In the context of the imposition of the levy, it cannot be said that performance is objectively and permanently impossible, only that it is significantly (potentially prohibitively) more expensive.

Although an increase in price through a levy in the US will be felt most keenly by the ultimate US purchaser of the product, the imposition of the levy will obviously impact on the procurement of goods from South Africa, and if they are procured, will impact the terms of supply agreements still to be drafted. As for existing agreements, they are already under a microscope on both sides of the Atlantic as contracting parties impacted by the tariffs look either to avoid contracts or enforce them.